How Many Medicare Part D Enrollees Had High Out-of-Pocket Drug Costs in 2017?

Data and Methods

This analysis uses Medicare Part D prescription drug event (PDE) claims data from the Centers for Medicare & Medicaid Services (CMS) Chronic Conditions Data Warehouse (CCW) for Part D enrollees between 2007 and 2017. The PDE claims data includes all prescription drug events reported by Part D plans for their enrollees in a given calendar year, and includes detailed data on spending for each event, corresponding to a single prescription drug fill, including how much was paid by plans, low-income subsidy amounts, and beneficiary out-of-pocket payments. The claims data includes spending for Part D covered drugs, but does not include spending on Part D plan premiums, Part B covered drugs (which are typically administered in providers’ offices or hospital outpatient settings), or the cost of drugs purchased outside the Part D plan. The CCW data also includes flags for several chronic conditions (27 common chronic conditions and 35 other chronic or potentially disabling conditions).

We calculated average out-of-pocket spending for enrollees overall and by benefit phases. Our analysis focuses on beneficiaries enrolled in both stand-alone prescription drug plans (PDPs) and Medicare Advantage prescription drug plans (MA-PDs) who have high out-of-pocket drug costs, which we define as enrollees who have drug spending that exceeds the catastrophic coverage threshold in a given year who do not receive low-income subsidies (LIS). The catastrophic threshold is updated annually by the annual percentage increase in average expenditures for Part D drugs per eligible beneficiary; in 2017, the threshold amount was $8,071. The 2017 20% PDE sample includes 8.9 million Part D enrollees (44.6 million weighted), of whom 718,276 (3.6 million weighted) had spending above the catastrophic coverage threshold, including 203,332 (1.0 million weighted) who had high out-of-pocket drug costs and did not receive the LIS. Our analysis of spending by chronic condition excludes beneficiaries who did not meet coverage criteria necessary to assign conditions, including those with multiple months of Medicare Advantage enrollment. This is because the CCW variables that identify chronic conditions are defined algorithmically based on information in medical claims, which are not available for Medicare Advantage enrollees.

Our analysis of chronic conditions and specific drugs associated with high out-of-pocket spending was limited to conditions and drugs with 100 (500 weighted) or more non-LIS beneficiaries with high out-of-pocket drug costs in 2017 to avoid reporting estimates based on small sample size. For specific drugs, there are two drugs that had higher average out-of-pocket costs among Part D enrollees with high out-of-pocket spending than the top drug we report (H.P. Acthar), but the number of non-LIS users of each of those drugs in the CCW PDE for 2017 was less than 20. Therefore, our analysis of the 10 most expensive drugs among those with high out-of-pocket costs is conservative to the extent that it does not include some drugs with higher out-of-pocket costs but smaller sample sizes.